Ge-rca Merger Would Be A Reunion

December 13, 1985|By David E. Sanger, The New York Times

NEW YORK — The merger agreement announced Wednesday night by the General Electric Co. and the RCA Corp. would rejoin two companies that fueled each other`s growth from the closing days of World War I and then diverged as each became giants of burgeoning industries.

Until the dawn of the computer age, the two companies were the symbols of American high technology. Both have undergone wide-ranging and often painful revampings to try to regain an edge lost to foreign competition.

It was General Electric, founded by Thomas Alva Edison and the inheritor of his incandescent lamp technology, that played a key role in the formation of the Radio Corp. of America in 1919. The company was forged out of the assets of the American Marconi Corp., makers of wireless receivers, to establish an American presence in the communications business.

For a decade, the companies were bound to each other, developing the first crystal set radios, which RCA began to sell in 1922 for $25.50. The partnership continued during the earliest experiments in television technology but ended when a federal court forced GE in 1933 to liquidate its RCA holdings.

From then on, RCA and GE competed fiercely. But RCA was already was on its way. By 1930, David Sarnoff was in firm control of the broadcasting company that he would shape until his death in 1971.

It was Sarnoff, a hard-driving businessman who barely finished grade school, who drove RCA to form the National Broadcasting Co. in 1926 - partly as a ploy to sell radios.

Starting as early as 1923, Sarnoff began pushing the company into television research, and stuck with it until the results were revealed. ``Now we add sight to sound,`` Sarnoff told an amazed crowd at the New York World`s Fair in 1939.

GE was hardly sitting still. It, too, had made its name at a World`s Fair, the 1893 extravaganza in Chicago that it lit by incandescent lamp with a 1,500-kilowatt generator that was widely hailed as a technological marvel.

By the 1930s, the company was turning its attention to vacuum tubes and X- rays, metallurgy and - with the start of World War II - atomic research. By the end of the war, both GE and RCA were critical military suppliers, and separately they raced into the new worlds of computers, electronics and aviation.

Their efforts were by turns an overwhelming success and a crashing failure. GE developed jet engines, still one of the company`s mainstays, and began making home appliances. RCA focused on color television sets, semiconductors and electronics systems.

Both companies poured millions into computers. But both faltered, and by the early 1970s they had abandoned their commercial computers.

RCA spent the 1960s and early 1970s venturing into areas as disparate as greeting cards and frozen food, carpeting and financial sevices. It bought Hertz rental car business and Random House, but those moves soured.

In 1981, the company turned to Thornton Bradshaw, then president of the Atlantic Richfield Co., to lead it out of its financial morass, and after a series of divestitures he returned the company to the black.

GE, meanwhile, had become a symbol of American industry`s competitive nightmares. The turnaround came in 1981, when Jack F. Welch Jr. became the chief executive.

He quickly disposed of unprofitable businesses, like small household appliances and data communications operations, and sharply trimmed the payroll. He began a variety of acquisitions, of which RCA is the grandest.

``They aren`t waiting around,`` Walter Wriston, the former chairman of Citicorp and a GE board member for more than two decades, said not long ago, ``until the changes are too late and too little.``